"Asia's Developing Financial Markets - Where Have They Come From and Where
Are They Going?, Mr. Mark Headley, Matthews International Funds, April 9,
1996






Mr. Headley discussed the Asian Tigers and Emerging Markets.  The Asian
Tigers account for almost 60% of the total market capitalization of
emerging markets, according to the International Finance Corporation. They
represent 63% of the large capitalization (large cap) companies, 24.7% of
the mid cap, and 11.8% of the small cap of the nine Tiger Markets.
Considering the nine largest Tigers, large caps are 65% of the market
capitalization. They are 7% of the number of companies in that category.
Small caps account for 10% of the market value but 71% of the number of
companies. Large cap refers to corporations with market value in excess of
$1 billion, mid cap is between $200 million and $1 billion, small cap is
less than $200 million.

The growth of the combined Asian Tigers market has exceeded the pace
achieved by the U.S. NASDAQ and the Standard and Poor 500 since 1987.

Hong Kong, Malaysia, and Singapore are among the most prominent in this
group. The importance of overseas Chinese (sometimes referred to as the
hidden superpower) is seen by comparing the number of listed companies
controlled by the Chinese and the percentage of population that are Chinese
by nation. In Thailand, Chinese companies control 81% of listed companies,
but only represent 3% of the population; in Indonesia is it 73% and 4%; in
Malaysia it is 65% and 35%; and in the Philippines it is 50% and 3%.

Some of the negatives of rapid economic growth include: political change
and instability, dependence on trade, inflation, rising wages, currency
appreciation, and pressures by the population regarding ecological
environment.

On the other hand, many of the nations enjoy consider economic freedom. The
Economist ranks Hong Kong as #1 (most free), Singapore as #2, Malaysia as
#6, Thailand #8, South Korea #12, Taiwan #16, the Philippines #27, and
Indonesia #31.  By comparison, the USA is ranked #4, Germany #20, France
#32, Mexico #36, and Brazil #94.

The most significant development in the last few years has been the steady
increase in the  breadth and depth of these markets, ex-Japan. Mr. Headley
focuses primarily on 9 Tigers: Hong Kong, Singapore, Malaysia, Thailand,
Indonesia, Philippines, China, South Korea, and Taiwan.